Tesla, once the undisputed leader in the electric vehicle revolution, is now grappling with a full-blown crisis. The company reported a shocking 13% drop in quarterly sales — its weakest performance in nearly three years — and saw a staggering $100 billion wiped from its market valuation in early 2025.

At the center of this downturn is a mix of faltering consumer sentiment, intensifying global competition, delays in product launches, and mounting backlash against the company’s mercurial CEO, Elon Musk.

For a brand that once defined the future of mobility, the dramatic fall marks a turning point. The cracks in Tesla’s once-bulletproof image are now impossible to ignore.

Tesla delivered just 336,681 vehicles globally in the first quarter of 2025, sharply down from 386,810 a year prior. This shortfall—nearly 50,000 fewer than last year and well below analyst estimates of 372,410—marks one of the steepest drops in Tesla’s recent history.

The market reaction was swift and severe. Tesla shares plummeted in after-hours trading, at one point shedding over 7% of their value before rebounding modestly on rumors about Musk’s political exit.

“The brand crisis issues are clearly having a negative impact on Tesla… there is no debate,” said Dan Ives, Managing Director at Wedbush Securities and a long-time Tesla bull. “These delivery numbers were a disaster and signal a deeper problem at the core of Tesla’s strategy and perception.”

A growing segment of Tesla customers and investors are distancing themselves from Elon Musk due to his increasingly visible political stances. Musk’s controversial involvement in U.S. federal politics — particularly his close ties to President Trump and his efforts to slash government spending — has alienated liberal-leaning consumers both in America and abroad.

This backlash has had tangible effects on Tesla’s operations. From protests outside showrooms to acts of vandalism targeting Tesla vehicles and charging stations, the company is now facing public relations challenges that few automakers have encountered.

In Europe, where EV adoption remains strong, Musk’s support for far-right parties in Germany and elsewhere has further alienated environmentally conscious consumers.

“The Tesla brand is no longer just about innovation; it’s become a lightning rod for political identity,” said Thomas Martin, Senior Portfolio Manager at Globalt Investments. “That’s a dangerous place to be when your customers want technology, not politics.”

While Tesla has always been a global player, its recent sales figures reveal troubling signs across key markets. In Europe, March marked the third consecutive monthly sales decline in countries like France and Sweden. Meanwhile, in China—a critical growth engine for the EV industry—Tesla also reported weak first-quarter numbers, losing ground to domestic rivals like BYD.

BYD, in fact, is on track to overtake Tesla in global EV market share for the first time ever in 2025, with an estimated 15.7% to Tesla’s 15.3%, according to data from Counterpoint Research. The Chinese automaker has aggressively priced its vehicles and continued to innovate, eroding Tesla’s dominance in critical segments.

Tesla is now pinning its hopes on a refreshed version of its best-selling Model Y SUV. The updated version, launched in China in February and in Europe and the U.S. in March, features design enhancements and improved tech. However, production delays stemming from the retooling of all four global factories led to weeks of downtime, exacerbating Q1 losses.

Even with the refresh, skepticism remains about whether the new Model Y can reignite demand.

“Even though there’s still growth in the EV market, the pace is slowing,” said Martin. “And with Model Y facing pressure from more affordable and fresher options in China and Europe, I’m not optimistic.”

Musk had previously promised 20–30% sales growth in 2025, banking on the launch of a long-promised affordable vehicle in the first half of the year and the continued rollout of the Cybertruck. Neither product has gained the traction Musk likely hoped for. The Cybertruck, in particular, has faced questions over its design, build quality, and steep price point.

Notably, Musk did not reiterate his bold growth forecast during Tesla’s January earnings call, instead opting for a more vague assurance that Tesla would “return to growth” this year. Investors will now be looking for concrete updates during the Q1 earnings call scheduled for April 22.

Tesla shares briefly recovered early Wednesday following a Politico report that Musk might soon step down as an adviser to President Trump. Some administration insiders reportedly view Musk as a political liability, potentially creating an opening for him to refocus on his role as CEO.

However, the White House quickly denied the report, saying Musk would remain in his advisory position to complete his mission to shrink the federal workforce and cut spending.

“Shareholders are hoping Musk will now have the time to focus on rebuilding the Tesla brand,” said Dennis Dick, Chief Strategist at Stock Trader Network. Dick holds a position in Tesla and believes the company needs more direct leadership from its founder during this turbulent period.

But with Musk’s attention divided between Tesla, SpaceX, X (formerly Twitter), and his political ambitions, the road ahead looks anything but smooth.

Tesla’s brand damage has been compounded by Musk’s failed attempt to sway political races. In Wisconsin, Musk spent over $20 million supporting a conservative candidate in a state supreme court election, only to see her liberal opponent win handily.

The campaign sparked public outcry, with residents protesting what they saw as an effort to “buy” democratic institutions.

The backlash fed into a broader narrative: that Musk’s personal agenda is increasingly shaping Tesla’s public image — for better or worse.

Further weighing on Tesla’s outlook are new tariffs imposed by President Trump on U.S. trading partners. While Tesla manufactures much of its fleet domestically, it still relies on imported parts. Musk himself has warned that the cost impact of these tariffs will be “non-trivial.”

As a result, Tesla could face tighter margins and delayed production schedules, even as competitors with more localized supply chains gain an edge.

With Tesla losing 45% of its value since mid-December, the company is at a critical inflection point. Once seen as a tech company disguised as an automaker, Tesla must now prove that it can weather not just market competition, but the fallout from its CEO’s political brand.

The upcoming April 22 earnings call will be a key test of Musk’s leadership. Investors will want clarity on the timeline for Tesla’s promised affordable vehicle, as well as updates on Cybertruck production and Model Y demand.

But perhaps the biggest question looming over Tesla isn’t about cars or technology — it’s about whether the brand can reclaim its identity from the man who built it.